The Equipment Leasing & Finance Foundation released the Q1 2023 Equipment Leasing & Finance Industry Snapshot, an indispensable information resource for industry participants. Designed for use in executive briefings and presentations, the presentation slide deck summarizes the current conditions and projections for the U.S. economy and equipment finance industry with clear, easy-to-digest charts and short narratives of key trends.

Among the range of details in the Q1 Snapshot:

◊ Overall, the Foundation projects the U.S. economy will grow by just 0.9 percent in 2023 due to a possible recession that could start in Q2 2023.

•  The economy expanded in Q3 2022 mainly due to robust net export growth, healthy consumer spending, and robust equipment and software investment.

◊ Economic tailwinds for growth in 2023 include:

• A strong labor market, which added 261K jobs in November 2022 and still has job openings well above pre-pandemic levels.
• Post-COVID supply chain shifts prompted by manufacturers rethinking globally distributed supply chain models.
• A pro-industrial legislative boost from Congress passing three major bills over the last 18 months, which collectively authorize at least $600 billion in new spending for a variety of industrial and infrastructure projects.

◊ Economic headwinds include:

• The global economy slowing sharply, as rising interest rates and geopolitical turmoil take their toll. Other risk factors, such as a slowdown in China, threaten to worsen the decline in growth. Fortunately, the U.S. remains relatively insulated from the slowing global economy for now.
• A sharply slowing housing sector, where quickly rising interest rates have dampened demand for housing and led to price drops, plummeting homebuilder sentiment, and record declines in mortgage applications.
• Financial market turmoil with the market for U.S. Treasury bonds experiencing collapses in liquidity, and the potential for a divided Congress facing another debt ceiling showdown.

 ◊ Recession risk:

• Currently, six of 10 indicators tracked in the Foundation-Keybridge Recession Monitor have exceeded the threshold Keybridge considers “recessionary.”
• High inflation pushing the Fed to raise interest rates is negatively affecting the housing market as well as businesses’ plans to invest.
• Wage growth has lagged inflation for 20 consecutive months, and real hourly earnings for private-sector employees are at levels last seen in January 2020.

◊ Equipment and software investment is expected to grow at a 4.2 percent pace in 2023.

• Equipment and software investment growth is forecasted to slow as the Fed’s rate hikes weigh on economic growth and cool business investment.

◊ New business volume growth reported in ELFA’s Monthly Leasing and Finance Index was up 6 percent year over year in October. Healthy NBV growth throughout 2022 has been supported by the unwinding of supply chains which has finally allowed many firms to acquire the equipment they need.

Prepared by Keybridge Research and updated quarterly, the snapshot is available for free download at https://www.leasefoundation.org/industry-resources/industry-snapshot/